Tahoe Truckee real estate began the second half of 2021 with a surge that may ultimately define the apex of an already extraordinary year. July posted 2021’s highest numbers for residential transactions and dollar volume while marking the year’s low for vacant land sales.
193 residential transactions is the high market for the year surpassing 177 from June and represents a 40% increase on the historical average for July. This is consistent with a long-standing trend in which closings increase steadily into the fall as summer shoppers converge with pre-winter purchasers. Similarly, $317,000,000 in total dollar volume is a strong 22% increase over the prior best month representing the extraordinary rise in pricing as well as a number of super-premium transactions.
In July, 2 properties sold for sums greater than $10,000,000. Year to date, 13 transactions have crossed this rare threshold: by far the greatest number ever for an entire calendar year. In fact, prior to this year, only 60 sales had ever broken this barrier on the California side.In total, 8 properties closed at pricing above $8,000,000 evenly disbursed between Tahoe lakefronts and Martis Camp estate homes. A staggering 98 of 193 sales, or 51%, closed above $1,000,000.
Correspondingly, average price in the month of July surged to $1,642,000. The year-to-date figure of $1,511,079 is 41% higher than 2020 and 62% greater than 2019.While these figures are blinding in a historical context, they actually represent a strong reversion to the mean compared to the same period in 2020. In July a year ago, 322 residential properties traded; the most ever for the local market. This period represented the culmination of available supply after the market paused in the early days of quarantine and what would become a tidal wave of demand as consumers sought refuge in the mountain in what would become a period of work-from-home and distance learning.
Supply in the local marketplace has crept up ever so slightly to nearly 6 weeks supply. While still heavily weighted in favor of sellers, this is a jump from a trough of less than one month’s inventory earlier this year. The reasons for this are many; some more obvious than others. A “normalizing” of conditions driven by the anticipation of offices and schools reopening is obvious. Similarly, price had to factor in at some point as the ambition of sellers outpaced the already stretched willingness of buyers. Of the 279 residential properties currently listed, the average asking price is $2,676,000, 62% above the average sale price in July.
Environmental and legislative factors have more subtle but still meaningful impacts on demand. At the simplest level, the smoke that has visited the region off and on in recent weeks has kept some number of consumers away thus deferring purchasing decisions. Based upon last years’ experience, this is purely a deferral, and these would-be consumers will return as skies clear. Placer County recently enacted a 45-day moratorium on new short-term rental permits for non-resort communities that has stymied a handful of transactions. Similarly, this pause is likely to be temporary pending the outcome of further work on this matter.
While home sales have surged, vacant land activity has mellowed significantly. Just 23 finished lots traded in July marking the low in any single month since May, 2020. Reasons for this drop are as simple as cost and time. Surging labor and commodity prices have mitigated any economic incentive to build new rather than buy existing property. Simultaneously, the surge of land sales in 2020 has created such a meaningful backlog of work for the top architects and builders in the area that many are only able to promise starts in the very later stages of 2022 while others are already booking into 2023. This renders occupancy 2-4 years away from a consumer base that will typically own these properties for 5-7 years.
Land prices typically adjust much more rapidly than homes that can add value in the form of shelter and utility. As sales activity for improved homes surges in late Q3 / early Q4 thus drying up available inventory, consumers will often turn to land; often simply to secure a foothold in the region.
A fascinating summer season is upon us as the entire Tahoe Truckee region adapts to new realities.